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On Friday, RBC Capital Markets maintained an Outperform rating and a $37.00 price target for Clearwater Paper (NYSE:CLW) Corporation shares (NYSE:CLW), currently trading at $29.70 with a market capitalization of $489 million, amidst reports that Suzano might be considering an acquisition of the company.
According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics. Bloomberg, citing sources familiar with the situation, reported that Suzano is exploring an offer for Clearwater Paper and is working with an advisor to potentially reach an agreement. However, there has been no official comment from either Suzano or Clearwater Paper regarding these claims.
The potential acquisition talks align with Suzano's previously expressed interest in expanding its North American packaging assets. RBC Capital analysts have identified Suzano as a probable buyer in this market segment.
In October, Suzano's Chief Financial Officer mentioned during a call with journalists that the company was evaluating new acquisitions in the United States and intended to continue investing in packaging, focusing on virgin fiber materials.
This development follows Suzano's acquisition activity earlier in the year, which included purchasing two mills from Pactiv Evergreen in October. Suzano had also shown interest in acquiring International Paper but decided to withdraw from the acquisition process earlier in 2024.
Clearwater Paper's stock may be influenced by these reports of potential acquisition interest from Suzano, a major player in the global pulp and paper industry. The stock has experienced a significant decline of over 50% in the past six months, while maintaining a strong free cash flow yield.
Investors and market watchers will be looking for any further developments or official statements from the involved parties. InvestingPro subscribers have access to 8 additional key insights about Clearwater Paper, including detailed analysis of management's share buyback activities and comprehensive valuation metrics in the Pro Research Report.
In other recent news, Clearwater Paper Corporation is in the spotlight due to a potential takeover bid by Brazil's Suzano SA and a trading blackout period. Reports suggest Suzano SA is considering an acquisition of Clearwater Paper, which could expand Suzano's presence in the U.S. market. However, no agreement has been finalized yet.
Simultaneously, Clearwater Paper has notified its executive officers and directors of a trading blackout period in compliance with the Sarbanes-Oxley Act of 2002 and SEC regulations. This blackout is linked to the completion of the sale of its consumer products division to Sofidel America Corp.
In terms of earnings and revenue, Clearwater Paper reported an adjusted EBITDA of $64 million for the third quarter of 2024. The company also completed the sale of its tissue business to Sofidel for $1.06 billion, marking a strategic shift towards becoming a leading paperboard packaging supplier.
Looking ahead, Clearwater Paper anticipates a decline in its fourth-quarter adjusted EBITDA due to the sale of the tissue business and a major maintenance outage. Despite these challenges, the company targets $1.8 billion in revenue at high utilization rates and aims for $50 million in annual cost savings. These are the recent developments at Clearwater Paper Corporation.
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